BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 1350 (Wolk) - Agricultural lands: greenhouse gases: Healthy
Soils Program
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|Version: May 10, 2016 |Policy Vote: E.Q. 6 - 0, AGRI. |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 16, 2016 |Consultant: Narisha Bonakdar |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 1350 requires the California Department of Food and
Agriculture (CDFA), in consultation with the Environmental
Farming Scientific Advisory Panel (panel), to establish and
oversee a Healthy Soils Program that provides incentives (i.e.,
loans and grants) and educational materials and outreach to
farmers whose management practices contribute to healthful soils
and result in net long-term on-farm greenhouse gas benefits.
The bill also expands the panel from five to seven members and
requires at least one member to have training and experience in
on-farm management practices that reduce greenhouse gas
emissions or sequester carbon.
Fiscal
Impact:
Approximately $290,000 (Cost of Implementation Fund (COI) and
GGRF) for the ARB to coordinate program development and
implementation with CDFA, to develop quantification
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methodologies for eligible projects, and to evaluate the legal
nexus and GHG reduction opportunities.
Approximately $2.2 million (GGRF) annually for CDFA's staffing
costs for program development and administration.
Background:1) Agriculture and GHG reductions. According to ARB's 2014
Scoping Plan Update, agricultural sources in 2012 accounted for
about eight percent of California's total GHG emissions,
including methane (CH4), carbon dioxide (CO2), nitrous oxide
(N2O), and black carbon. California's agricultural GHG emission
inventory includes on-site emissions from animal enteric
fermentation, manure management, rice cultivation, energy use
(including fuel combustion), crop residue burning, and soil
management practices, particularly fertilizer and manure
applications.
However, various agricultural practices can significantly reduce
GHG emissions, and sequester carbon as well. GHG reduction and
sequestration strategies in the agricultural sector include
reduced energy usage through more efficient watering systems,
such as drip irrigation; reduced nitrogen fertilizer usage;
shifting tilling practices to improve soil carbon retention;
changing livestock feed and practices to reduce livestock
enteric rumination, manure management where manure is converted
to alternative fuels; and establishing perennial vegetation on
land retired from agriculture production to sequester carbon in
the plants and soil. In addition, recent research also suggests
that applications of compost may result in greater carbon
sequestration in soils.
Many of these land management practices to reduce or sequester
GHGs also result in significant environmental cobenefits, such
as improved water efficiency, improved air and water quality,
and greater resiliency of agricultural land to climate change.
Cap-and-trade auction revenue. Since November 2012, ARB has
conducted 14 cap-and-trade auctions, generating over $4 billion
in proceeds to the state.
State law specifies that the auction revenues must be used to
facilitate the achievement of GHG emissions reductions and
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outlines various categories of allowable expenditures. Statute
further requires the Department of Finance, in consultation with
ARB and any other relevant state agency, to develop a three-year
investment plan for the auction proceeds, which are deposited in
the GGRF.
Legal consideration of cap-and-trade auction revenues. The
2012-13 Budget analysis of cap-and-trade auction revenue by the
Legislative Analyst's Office noted that, based on an opinion
from the Office of Legislative Counsel, the auction revenues
should be considered mitigation fee revenues, and their use
requires that a clear nexus exist between an activity for which
a mitigation fee is used and the adverse effects related to the
activity on which that fee is levied. Therefore, in order for
their use to be valid as mitigation fees, revenues from the
cap-and-trade auction must be used to mitigate GHG emissions or
the harms caused by GHG emissions.
In 2012, the California Chamber of Commerce filed a lawsuit
against the ARB claiming that cap-and-trade auction revenues
constitute illegal tax revenue. In November 2013, the superior
court ruling declined to hold the auction a tax, concluding that
it is more akin to a regulatory fee. In February of 2014, the
plaintiffs filed an appeal with the 3rd District Court of Appeal
in Sacramento. That case is currently pending.
Healthy Soils Initiative and the budget. In his 2015-16 budget
proposal, Governor Brown directed $10 million from the GGRF
toward a new "Healthy Soils Initiative" to increase carbon in
soil to improve soil health, agricultural productivity, soil
water-holding capacity, and decreased sediment erosion.
Governor Brown directed CDFA, under its existing authority
provided by the Cannella Environmental Farming Act, to
coordinate with other key agencies to work on several new
initiatives. CDFA has since developed five action measures:
protect and restore soil carbon; identify funding opportunities,
including market development; provide research, education and
technical support; increase governmental efficiencies to enhance
soil health on public and private lands; and ensure interagency
coordination and collaboration. However, no appropriations to
CDFA for a "Healthy Soils" program were approved by the
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Legislature last year.
Proposed Law:
This bill:
1) Requires the Secretary of CDFA to appoint five members to the
panel, bringing the total Panel membership to seven, and
requires two of those members have at least five years of
experience in agriculture and represent production
agriculture.
2) Requires that at least one of the members appointed by the
Secretary of CDFA have experience in on-farm management
practices that reduce or sequester GHG emissions.
3) Requires ARB to consult with the Secretary of CDFA, and the
Panel, for development of on-farm GHG emission reduction
quantification methodology.
4) Allows CDFA, in consultation with the panel, to determine
priorities for the program and give priority to projects that
occur in and benefit disadvantaged communities, show promise
of being replicable in other parts of the state, or provide
environmental and agronomic cobenefits, such as improved air
and water quality, improved crop yield, and reduced soil
erosion.
5) Authorizes the panel to advise CDFA on scientific findings,
program framework, guidelines, grower incentives, and
providing technical assistance.
6) If CDFA elects to fund on-farm demonstration projects,
requires CDFA, in consultation with the panel, to establish a
technical advisory committee to review on-farm demonstration
project applications for scientific validity and the proposed
project's potential to achieve greenhouse gas benefits.
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7) Requires CDFA, in consultation with the Panel, to implement a
Healthy Soils Program to provide incentives, including loans,
grants, research, and technical assistance or educational
materials and outreach, to farmers whose management practices
contribute to healthful soils and result in net long-term
on-farm greenhouse gas benefits.
8) Requires CDFA to implement the program in accordance with
funding guidelines and quantification methodologies developed
by ARB.
Staff Comments: Staff notes that there are multiple bills being
considered by both houses of the Legislature that propose
projects that would be eligible to receive GGRF funds. It is
unclear how these bills will interact with each other.
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